RUSSIA MONITOR MONTHLY 01/2019

Contents

Last-ditch talks, which took place in Beijing to save the landmark INF Treaty, failed to bring any results just a few days ahead of the expiration of a U.S. deadline for Moscow to comply with the treaty. Russia still claims that it does not violate the provisions of The Treaty on the Elimination of The Intermediate-Range and Shorter-Range Missiles, commonly referred to as the INF.

The independence move of the Ukrainian Orthodox Church has been the most significant blow to the Russian Orthodox Church for decades as the latter institution remains a traditional tool in the Kremlin’s hands. The decision of the Ukrainian Orthodox Church caused fury in Moscow.

As many as ten air incidents, mostly related to intercepting enemy aircraft and violating the airspace of one of the countries over the Baltic Sea, were reported within less than two weeks. They all involved the use of fighter jets, bombers aircraft and reconnaissance planes affecting NATO, Russia and, importantly, neutral Sweden.

Russian federal authorities recently detained a number of people who were reportedly linked to Gazprom’s regional subsidiaries, including leaders of an influential clan from Karachaevo-Cherkessiya. Russian Senator Rauf Arashukov was detained at a session of the Federation Council, the Russian parliament’s upper chamber, on January 30 while his father, Raul Arashukov, was taken into custody in St. Petersburg.

U.S. restrictions against Venezuela’s state-run oil company PDVSA are the worst-case scenario for Maduro’s regime. PDVSA and Russia’s state-run oil giant Rosneft participate in a number of joint mining projects; in addition, the Venezuelan company owes Sechin’s firm a total amount of 3 billion dollars.

After the recent meeting of the NATO-Russia Council, which turned out unsuccessful for Moscow, Russian media reported that several dozens of tanks had been deployed to the Baltic exclave of Kaliningrad in the vicinity of the Polish border. Militarily, this does not introduce many changes to existing the balance of power.

Russia and Venezuela have been tied by a strategic alliance. Moscow actively backed subsequent regimes of Chavez and Maduro, considering the latter its top ally against the US in the western hemisphere. Caracas has been granted billions of dollars for making further concessions for Russia’s state-run oil giant Rosneft, providing support for such regimes like Cuba.

Donald Trump’s decision to pull out American troops from Syria may change the strategic situation in the country, with the particular regard to its northeastern regions. This event is likely to be used by Turkey to destroy the Syrian Kurdish YPG militia. And yet Moscow became a key mediator in talks between Kurds and the Damascus government.

The current situation on global oil market is conducive to Russia’s growing exports to the Chinese market. Russian exporters have seemed to take advantage of favorable circumstances, including recent crisis in Venezuela, anti-Iranian sanctions, U.S.-China trade war and attempt to influence the market by OPEC+ member states, which enabled them to become a key player in the Middle Kingdom.

Russian President Vladimir Putin recently boasted about Kaliningrad’s gas independence, a solution that comes as politically effective yet economically profitable. A floating vessel had been built in the Far East, from where it was later shipped to Kaliningrad. Nonetheless, Russian infrastructure for LNG production and transport needs to be dramatically improved.

Moscow is doing its utmost to take advantage of the current status in the OPEC+ while hoping to gain maximum profits from selling crude oil. When other countries rush to reduce their oil output, aiming to raise global prices, Russian firms have no intention to cut production rapidly, thus earning money at the expense of their partners.

According to polls published in late 2018 and early 2019, Russian society’s opinion on the Russian authorities has never been worse. Citizens are increasingly critical towards both the government – an institution that tends to be accounted for all state’s problems – and the president. Interestingly, the latter until now played the role of a “monarch” who seemed to rule over troublesome issues of the Russians.

Chechnya and its leader Ramzan Kadyrov has long been aroused envy of both other regions’ governors and Moscow’s ruling elites. Kadyrov’s great personal relations with Vladimir Putin seem to prevail over complaints and intrigues. This also applies to the energy industry. After having taken over oil assets and exacerbated hitherto conflict with Rosneft’s CEO Igor Sechin, Chechnya’s leader decided to go to war with Gazprom.

Given the dramatically poor economic situation in many African countries and relatively low financial costs needed to provide some political regimes with essential aid, it does not come as a surprise that Moscow keeps getting involved in backing more and more states of the Dark Continent.

Both Russian Embassy in Khartoum and Sudan’s Interior Ministry denied reports that Russian mercenaries are aiding in quashing anti-government protests. However, they admitted that “Russian advisors” help to train Sudanese special forces. The country has shaken by mass protests against President Omar al-Bashir, which caused the Kremlin’s serious concern.

Novatek’s development and its income from Arctic LNG projects seem to depend on its regular, rapid and increasing supplies to Asian-Pacific markets. Russia’s largest private-owned gas firm aims at expanding its transport infrastructure on the Northern Sea Route, which explains the company’s plans to build a trans-shipment terminal in the Kamchatka Peninsula and a recent Russian-Japanese deal.

In mid-January, Russia’s state-owned company Gazprom announced the beginning of gas sales to Europe’s biggest gas hub in the Netherlands. Since last autumn Russia’s gas giant has been gradually changing its sales strategy on the EU market and it began to sell its raw material making spot transactions through the electronic trading platform.

Macedonian parliament’s recent decision to change the country’s name sparked outrage in Moscow while a statement issued by Russian Foreign Ministry is considered as meddling in other country’s domestic affairs. According to Moscow, Macedonia’s name was changed against the will of its citizens while violating Macedonian law.

The United States may impose further sanctions on Western companies that finance the Nord Stream 2 gas pipeline and those that are in charge of carrying out pipe-laying operations on the seabed. Both media reports and an open letter sent by the U.S. Ambassador to Germany caused some nervous reactions amid Germany’s decision-makers.

A decision to award a state grant to a company held by Arkady Rotenberg revealed corruption of Putin’s Russia, not to mention its dramatic lack of self-preservation instinct. Rotenberg, who is Putin’s friend, was offered lucrative contracts, including those to build gas pipelines to China and Germany, construct a bridge to Crimea and to prepare infrastructure for Winter Olympic Games.